Analysis of Proposed New CMS Rules on Medicaid Cost-sharing for ER Care

The Centers for Medicare & Medicaid Services (CMS) just published some newly proposed rules that enable States to impose increased cost sharing on Medicaid patients for non-emergency care in the ER. These rules open the door even wider for these States to abuse ER providers and hospitals, and discourage Medicaid patients from seeking needed care. Sadly, CMS did not even bother to consult with the American College of Emergency Physicians before drafting these rules, which makes it a lot more difficult to put some of the more problematic provisions back into Pandora’s box. There is a good article on these proposed rules in the NY Times if you want a thousand foot view. I’ve done a pretty thorough review of these rules, and will try to highlight the pertinent language and possible consequences of the provisions related to emergency care; so lets get into the weeds:

“Sections 1916(a)(3) and 1916(b)(3) of the Act allow states to establish cost sharing for non-emergency use of the ED of up to twice the nominal amount for outpatient services, with a waiver. In addition, section 1916A(e)(2)(A) of the Act allows states to establish targeted cost sharing for individuals with family income above 100 and at or below 150 percent of the FPL in an amount not to exceed twice the nominal amount for such services. In order to make it easier for states to utilize existing flexibilities to reduce non-emergency use of the ED, at §447.54(a) we propose to allow cost sharing of up to $8 for non-emergency use of the ED (and) no waiver will be required. We seek comment on this approach, which can complement a range of other strategies available to states to reduce non-emergency use of the ED. For individuals with family income above 150 percent of the FPL, per section 1916A(e) of the Act, there is no limit on the cost sharing that may be imposed for non-emergency use of the ED.”

“114. Section 447.55 is revised to read as follows: (f) Aggregate limits. (1) Subject to paragraph (f)(2) of this section, any Medicaid premiums and cost sharing incurred by all individuals in the Medicaid household may not exceed an aggregate limit of 5 percent of the family’s income applied on either a quarterly or monthly basis, as specified by the agency.”

One hundred percent of the Federal Poverty Level” is $19,090 for a family of three. Thus, a family of three with annual income of $30,000 and Medicaid coverage could be required to pay the entire (Medicaid allowable) cost of an ER visit, or up to as much as $1,500 in premiums and co-payments per year. Let me rephrase this: if a patient in such a family comes to the ER for treatment of what is retroactively determined by the State or a Medicaid Managed Care (MMC) plan to be a ‘non-emergency’, then the payer could decide not to pay anything towards that service, not even the medical screening exam, forcing the hospital and emergency physician to try to squeeze blood from this stone to cover some portion of the cost of care. As Barbara Tomar at ACEP pointed out: increasing enrollee cost-sharing for these so-called non-emergency visits, and also for the care of payer-validated medical emergencies, effectively shifts the cost on to the backs of emergency care providers, and on those who can barely afford to feed their families. Here’s what CMS had to say about this:

“Research has shown that higher-than-nominal cost sharing on very low-income individuals can have an adverse impact on access to services by discouraging or preventing such individuals from seeking needed care. However, such impacts are not likely to result from the changes proposed here as they are largely focused on services where there are more appropriate and less costly alternatives.”

“Increased cost sharing may have a negative impact on providers, as uncollected cost sharing reduces provider reimbursement, to the extent that the beneficiary cannot or does not pay the cost sharing and services are nonetheless provided. Under the DRA provisions and this proposed rule, however, states may minimize this impact by allowing providers to deny services for failure to pay the required cost sharing in certain circumstances.”

Of course, these certain circumstances are rather limited, but in any case encouraging hospitals to deny medically indicated services to patients because the payer might decide, long after the ER visit, that the care could have been provided in an alternate setting, is a prescription for expensive EMTALA violations, malpractice suits, and unnecessary exposure of the community to undiagnosed but very serious contagious diseases. Ensuring that patients have some skin in the game is generally good health policy, but it is complicated and dangerous in the ER setting, and with the EMTALA mandate it puts providers between a rock and a hard place. The CMS solution to the un-necessary ER visit problem clearly seems to be to encourage providers to boot patients out the ER door, and this is a drastic solution to a problem that truly has little overall budgetary significance.

So how does CMS propose to mitigate the impact of these increased incentives to deny care to Medicaid enrollees? Why by requiring ER physicians and hospitals to do more for less, of course. I have often suggested that before hospitals kick ER patients to the sidewalk because the patient has no insurance or inadequate insurance and might not meet the prudent layperson standard; the hospital should be required to ‘ensure that beneficiaries have appropriate access to other sources of care’. CMS apparently now agrees, and does cite the need for EMTALA medical screening and relies on the prudent layperson definition of a medical emergency; but get this: the hospital must jump through all these hoops ‘before cost sharing is imposed’. If this sounds confusing, it’s because it makes no sense:

“(d) In order for the agency (not sure if this means the State or the Hospital) to impose cost sharing … .for non-emergency use of the ED, the hospital providing the care must:

1) Conduct an appropriate medical screening pursuant to §489.24 of this chapter to determine that the individual does not need emergency services.

2) Before providing treatment and imposing cost sharing on an individual

(i) Provide the individual with the name and location of an available and accessible alternative non-emergency services provider;

(ii) Ensure that the alternative provider can provide services to the individual in a timely manner with the imposition of a lesser cost sharing amount or no cost sharing if the individual is otherwise exempt from cost sharing; and

(iii) Coordinate scheduling and provide a referral for treatment by this provider.

(e) Nothing in this section shall be construed to:

1. Limit a hospital’s obligations with respect to screening and stabilizing treatment of an emergency medical condition under section 1867 of the Act; or

2. Modify any obligations under either state or federal standards relating to the application of a prudent- layperson standard with respect to payment or coverage of emergency medical services by any managed care organization.”

Let’s see how this is likely to work. First, the patient must have a medical screening exam and, if it appears that the State or the MMC plan will be unlikely to pay for the ‘non-emergency care’, the ER staff must set the patient up with a timely appointment with a clinic or urgent care center that will see the Medicaid patient at a lower copay (or no copay for certain ‘exempt’ patients), and that are “located within close proximity, accessible via public transportation, have open extended hours, and are able to serve individuals with LEP and disabilities” before providing post-stabilization or non-emergency care, or booting the patient to the curb. Then, when the hospital and provider submits their bill for the care, the State (Fee for Service Medicaid) will allow the providers to bill the patient for some or all of these services (at Medicaid rates), or the MMC plan will pay the providers a nominal fee for the screening services, and perhaps allow the providers to bill the patient for the rest of the care.

On the other hand, if the ER staff decide that the patient meets the prudent layperson standard, and they provide a more thorough evaluation and indicated treatment; but in retrospect the State or MMC plan decides the patient did NOT meet the prudent layperson standard, then the hospital may not get paid anything and will not be able to collect a cost-sharing payment from the patient (since they did not jump through the alternative venue appointment hoops). It’s a catch-22 if I ever saw one. Of course, there are all sorts of variations on this theme, and it is entirely unclear how different States and plans will interpret these rules, determine if the PLP was met, or respond to these claims; or how hospitals and ER physicians are supposed to cope with such an uncertain and obtuse approach to patient care, claims management, and reimbursement. This gets even more complicated when considering the variable aggregate limits imposed on costsharing, which will be all but impossible to track.

Fortunately, CMS did throw providers a bone:

“The EMTALA screening requirements combined with the prudent layperson standard (PLP) for an emergency medical condition make it difficult to determine a service as non- emergency just based on CPT code. Chest pains, for example, could easily be considered an emergency condition under the prudent layperson standard, though a medical screening may indicate that the individual is suffering from heartburn or anxiety, which may not otherwise be considered emergency medical conditions. While the applicable CPT code might indicate a non-emergency condition, such chest pains would meet the definition of emergency medical condition and therefore may not be assessed a copayment.”

This provision should restrict States and MMC plans from using diagnosis lists (I think CMS meant ICD-9 rather than CPT) to down-code claims to a ‘medical screening exam fee’, or deny coverage and payment altogether; but the payers will do it anyway and only consider a review of the medical record to assess PLP when the denied or down-coded claim is appealed. You can imagine how cost-effective it is to appeal lower-acuity Medicaid claims. Plus, if a hospital collects a co-pay, and then the payer decides the case is a ‘real emergency’, does the hospital then have to return the $8 to the patient? It sure is great to know that “States have flexibility to consider how best to address some of these logistical and clinical challenges that exist when applying cost sharing to non-emergency use of the ED.”

So I ask: all of this Federal falderal, for what? The cost of providing non-emergency care to patients in the ER (less the cost of providing this care in ‘less expensive’ venues) probably represents less than 0.05% of the Medicaid budget. ACEP and other emergency medicine organizations will undoubtedly be responding to these proposed regulations, but if like me you have a real concern about their possible impact, you should provide your own feedback to CMS via this page on the CMS website.

R. Myles Riner, MD, FACEP

Myles Riner, MD, FACEP, was a Partner with CEP America for nearly 30 years, where he served as director of provider relations and on the board of directors. Dr. Riner was also a staff physician at Marin General Hospital in Greenbrae, California, until retiring from clinical practice in 2009. He served as president of the California Chapter of ACEP from 2006-2007, and in 2010, he received both the ACEP Collin Rorie Award for Excellence in Health Policy and CEP America's highest honor, the Myron Wacholder Legacy Award. Dr. Riner is a physician consultant, the author of the healthcare blog The Fickle Finger (www.ficklefinger.net/blog/) and a regular contributor at KevinMD.com. Follow him on Twitter at @MylesRiner.